A bigger picture

June 4, 2009

In the discussion that has developed around Baltimore’s vacant and abandoned property, one thing has become enormously clear to me. A fundamental issue feeding much of the city’s challenges is underutilized infrastructure. Baltimore is a city that grew to house over 900,000 people at the city’s population peak. Currently, we’re around 640,000. That means that the city infrastructure is overdeveloped by ~30%. Infrastructure is the physical network of buildings, roads, sewers, utility lines, bridges, ports, light rail, etc. The service network of solid waste collection, fire fighting, policing, health care, etc. depends on the physical infrastructure. It needs to be maintained. Maintenance costs money. We’re in a situation where we’re attempting to maintain city infrastructure that is 30% too large. This has resulted in everything being stretched thin, compounding the problems of overtaxed city services and residential flight.

So what can we do? 1. Attract residents. 2. Make the city infrastructure smaller.

In the comments of this site, there has been some back and forth between the two ideas. There are advocates for knocking down swaths of the city that are currently under-utilized (blighted). My initial proposal to revive the dollar house program approached the issue from the opposite side, creating an attractive environment for new residents to come to the city. I believe that both approaches are in order. I also believe that the folks at City Hall are of the same mindset.

The Waverly Playground at the YMCA burned down late last year, after three years of great fun. The community immediately rallied to rebuild it; in fact, I just got back from a shift with hundreds of other volunteers digging holes, cutting beams and installing posts. There is a lot of clay in the ground – wow!

City Council Rep. Mary Pat Clarke was there to show support, as she’s been instrumental in organizing the rebuild, and Mayor Sheila Dixon stopped by to give a speech, and dig a few holes herself. I had a chance to speak with them both for a few moments. Mary Pat helped coordinate the original dollar homes program, and had a few more pieces of information about how that was run.

Both Federal Hill and Otterbein were classified as historic districts, so there were a number of architectural requirements that were necessary for any renovation to be approved. The key element was that the city didn’t transfer the title to the purchaser until the home has been inspected and approved. That guaranteed that houses wouldn’t be sat on by speculative investors waiting on appreciation; the purchaser didn’t actually own the house until is was proven livable. Pretty smart, Mary Pat! 

Mayor Dixon was also eager to discuss the plan tomorrow night. As many people have expressed, she is concerned about speculators and slumlords, as she noted that some houses that were sold by the city to private citizens are still a source of trouble in our neighborhoods. Ensuring that adequate time and/or capital is invested in dollar home properties will be key to success.

All in all, a very encouraging day! The City is just as concerned and optimistic as we are, so I’m sure we’re heading down the right path already. Please come make your voice heard tomorrow evening!

I recently had the opportunity to sit down with Robert Embry, currently president of the Abell Foundation and formerly Commissioner of the Baltimore City Department of Housing and Community Development. Mr. Embry managed the dollar house program that the city ran in the early 1980s, and was kind enough to provide some historical insight into the program’s origins and mechanisms.

The program was created in response to a rather unique set of circumstances. The City had purchased a number of houses in order to demolish them for the construction of interstate I-170, a strip of connector highway intended to link I-70 to I-95. Neighborhoods on the western edge of downtown, such as Barre Circle, Otterbein and Ridgely’s Delight were where the city had concentrated property holdings. Due to public opposition to the I-170 construction plan, the project was terminated, though not before the current expressway section of US-40/Franklin St. was completed. The City suddenly found itself as a large residential property owner in some marginal neighborhoods, and formulated the dollar house program to handle the change in situation.

The program had four key points that contributed to its success.

  1. Truly low barrier to homeownership. Resident homeowners are the lifeblood of a city. Converting renters to homeowners, or attracting new resident homeowners from other locations maintains the vitality of a place. Investing in where you live is a heavy incentive to increase your involvement in community life.
  2. Clustered properties. Since the City had purchased whole blocks of properties, it was possible to quickly improve large parts of a neighborhood. When an entire block of homes is renovated simultaneously, residents can see progress on a large scale being made daily, and the investment in homeownership creates financial rewards immediately.
  3. Direct loans from the city. Of course, renovating a home costs more than a dollar. Since the city was selling the homes for $1, a prospective buyer didn’t need to come to closing with thousands of dollars in collateral to get an 80% mortgage on the property. However, there weren’t any banks that would finance the renovation loans under those circumstances. To provide the capital for renovation, the City issued bonds and loaned the resulting money to the new homeowners at + 1%. Over the course of the program, not a single homeowner defaulted on a loan, and the city turned a handsome profit on loan interest. Read that sentence one more time.
  4. A dedicated office. A dedicated advisory office was established to help guide the homeowners through the renovation process, as many had not been through it before. The office helped the homeowners connect with architects and reliable, licensed contractors, and provided a general resource for information and support.

Mr. Embry considered the program to be an unmitigated success, and if you take a stroll through any of the neighborhoods I mentioned, you’ll find them to be some of the most charming places in Baltimore.  Consider that the City treasury grew through running this program, and it certainly seems like a win-win-win for the city government, the new resident homeowners and the city-at-large.

Time has not stood still over the past 30 years, and circumstances are different now than they were then, but the keys illustrated above can guide us to a new vision, a new strategy and new tactics to address the issues of today.

Please feel free to continue the discussion in the comments. If you have any questions or would like clarifications, I’m sure Mr. Embry would be happy to answer what he can. Many thanks to him for his time!

Many thanks to Jamie Smith-Hopkins of the Baltimore Sun for putting together an email interview in the about the vacant house situation here in Baltimore.

As always, this site is open for discussion, so feel free to add your thoughts in the comments!

Outer Harbor Initiative

April 21, 2009

One of the factors that has contributed to the present state of affairs in our city’s blighted neighborhoods is the ineffectiveness of our code enforcement practices.

It is illegal to not pay your taxes, and it is a violation of code to allow your property’s roof, or front stairs, or back wall to collapse. These code violations draw fines from the city, if it has the manpower to inspect the property and confirm the violation. The 311 service is the biggest channel for citizens to report these violations, and it is widely used. 

However, if a property owner chooses not to pay the fines, or lets the back taxes accrue for a decade, the City doesn’t have much recourse for action. Property ownership is something of a sacred cow in these United States; you don’t mess with a property owner. However, that assumption is rooted in the fact that a property owner is part of the social fabric of a community. When property owners stop contributing to a community’s health, and start damaging it, the only tools available to the City are tax liens, code violations, and in extreme cases, eminent domain. 

It is apparent that these tools are insufficient to deal with the number of slumlords in the city. 

The Outer Harbor Initiative seeks to address that. Co-sponsored by Councilman William Cole and Chesapeake Habitat for Humanity, OHI is legislation to upgrade the tools the City can use to deal with absentee landlords. This initiative dovetials beautifully with the dollar home concept:

Get properties out of slumlords’ hands + get properties into resident homeowners’ hands = Safer, cleaner, healthier Baltimore

Two days from now, Thursday, 4/23/2009 at 4pm, there will be a hearing at City Hall to discuss the initiative. If you agree with the goals of the program, call your City Councilperson, or come to the hearing.

Let’s get our plan on the radar before this event, and galvanize a change this May 6th!

The Mayor Wants To Hear From You. Join us to discuss ideas and solutions for tackling Baltimore City’s vacant and abandoned properties. Mayor Dixon‘s Neighborhood Conversations are an opportunity to be informed about issues that impact neighborhoods across Baltimore City.

For more information:
Contact the Mayor’s Office of Neighborhoods at 410.396.4735
Sign up to receive the Dixon Report at www.baltimorecity.gov

May 6, 2009
6:00pm – 8:00pm
Heritage High School
on the Lake Clifton Campus
2801 Saint Lo Drive
Baltimore, MD 21213

Investing in Baltimore

April 20, 2009

I have an innovative plan for Baltimore’s vacant and abandoned houses that I would like to put into the public forum: give them away.

Any house that is owned by the City, or that has an outstanding tax lien of over two years and is unoccupied, should be available for purchase by the general public for a nominal sum (less than $100). These properties, as they stand currently, are less than worthless. They actively de-value other homes in the area, as well as attract rats, garbage, drug addicts, drug dealers, thieves and prostitutes. As such, the City should not be treating these properties as if they have some value on the open market, which is the assumption that programs like SCOPE and Project 5000 operate under.

However, if the barrier to owning these properties is sufficiently lowered, we create a very desirable situation for homeownership. Economic empowerment through property ownership, sweeping neighborhood improvement, and community re-investment would be available to individuals and families alike. There would be an influx of new residents and capital seeking to take advantage of this environment.

An auction system should be established for transferring these properties from the public to private domain. The opening bid should be $1. This will keep the cost to entry sufficiently low, while ensuring that there is adequate competition for desirable diamond-in-the-rough properties.

Current city residents should receive priority, via a one year window after the program starts. During this one year window, a potential homeowner would have to show proof of residence in Baltimore City to purchase a property. After this one year period, anyone could purchase properties.

There will be a condition upon purchasing the property that it must be used as a residency within two years of purchase, or the City will have the right to return the property to the purchase pool.

A baseline assessment would need to be determined on each property, using the current assessment methodologies. The new owner of the property would be taxed on the assessed value. A property assessed at $10,000 at time of purchase would owe $226.80 per year to the City, based on current property tax rates. This generates revenue for City operations, thus extracting some value from these currently valueless properties.

Such a plan has the following advantages over the current state of affairs:

  • Extremely favorable environment for re-investment and re-population
  • Extremely favorable environment for creating home improvement jobs
  • Reduced maintenance and policing costs for the city
  • Tax revenue generated where there is currently none

While the exact mechanisms of operating this plan must be fine tuned, we have the ability to change an undesirable situation into a very desirable situation with this policy.  Certainly this plan has its flaws and loopholes to be taken advantage of by the ill-intentioned; however, I cannot see any reason that such a course of action could be any worse than the current state of affairs in our blighted neighborhoods.

Leave your thoughts in the comments – what are the flaws in the plan? Where can we improve? Just want to show your support? Please do!